12th July 2011

HMRC ''must review data'' for IR35 changes to be meaningful

Tax authority must measure impact of changes HMRC needs to carefully consider how it will assess the impact of changes to IR35.

Without comparison to existing data on the administration of IR35, it will be difficult to assess whether the forthcoming reforms are beneficial for contractors and HM Revenue & Customs (HMRC), Contractor Calculator has said.

According to the website, the review has stipulated that any reforms to IR35 must be "revenue neutral", meaning it is unlikely contractors will see tax breaks as a result of the changes.

"If HMRC and the Treasury are serious about improving the administration of IR35, and improving the experience contractors have of the process, it must put transparent measurement processes into place," said Contractor Calculator.

This means gathering at least a year's worth of data and creating a benchmark of what people think of the current situation, as well as analysing the consequences of any alterations.

HMRC recently saw an appeal against Marlen Ltd turned down by a tribunal, which concluded that the test factors of control and mutuality of obligation were insufficient regarding a contract at JCB.ADNFCR-3595-ID-800618649-ADNFCR

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